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A company finds that one of its warehouses is out of capacity to store products. Expanding the physical size of the warehouse is not an option. The most appropriate solution would be to increase the:
The purpose of price differentiation is to:
In a make-or-buy decision, if the product is modular and the company is dependent on knowledge and capacity, outsourcing most likely will be:
A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:
For an item with high profit impact and low supply risk, what would be a likely procurement strategy to support the overall supply strategy?
Supply chains delivering products or services are most able to respond quickly to changing market requirements when:
Throughout most of the supply chain, safety stock will be de-emphasized as a result of improved:
The primary risk associated with outsourcing innovative components to suppliers is:
The practice of supply chain members acting in close collaboration while retaining independent ownership is known as:
A company considers moving a portion of its production to a distant country to support a major customer. Which of the following actions is most effective in mitigating the risk of financial loss in the event of a global economic downturn?

Question 221 - CSCP discussion

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A firm has increased finished-goods inventories for several products to compensate for increased variability in demand. The firm analyzed shipment data and determined that the variability was due to a few customers placing large orders for single shipments to obtain discounts. Which of the following actions is the firm most likely to take to maintain sales and reduce variability in demand?

A.
Reducing discounts for large orders
Answers
A.
Reducing discounts for large orders
B.
Encouraging high-volume customers to place blanket orders
Answers
B.
Encouraging high-volume customers to place blanket orders
C.
Implementing extrinsic forecasting methods
Answers
C.
Implementing extrinsic forecasting methods
D.
Increasing the level of safety stock on high-volume products
Answers
D.
Increasing the level of safety stock on high-volume products
Suggested answer: B

Explanation:

To maintain sales and reduce variability in demand caused by large, infrequent orders, the firm should encourage high-volume customers to place blanket orders. Blanket orders are long-term agreements where customers commit to purchasing a certain amount over a specified period, with regular deliveries as needed. This approach smooths out demand variability, allows for better production planning, and reduces the need for holding high levels of finished-goods inventory. Reducing discounts for large orders might deter customers, extrinsic forecasting methods do not address the root cause, and increasing safety stock only temporarily mitigates the symptoms without solving the underlying issue.

Silver, E. A., Pyke, D. F., & Thomas, D. J. (2016). Inventory and Production Management in Supply Chains. CRC Press.

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.

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asked 16/09/2024
Pawel Szalek
36 questions
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